OPEC President and Algerian Oil Minister Chakib Khelil said on January 3rd that cartel members were in agreement over slashing oil production at the upcoming meeting in Vienna on January 17th.
Khelil said that: “Right now there is a large consensus among OPEC members to cut production but I cannot tell you how big the reduction will be.” Speculation that the group could move to cut production by 500,000 b/d ahead of the meeting was silenced on January 2nd, when the price of OPEC’s basket of seven crudes settled back into the $22-28 a barrel range at $22.40, after recording seven days below $22 a barrel.
Under the group’s price band mechanism, if the basket price dips below $22 a barrel for more than 10 consecutive working days, a production cut of 500,000 b/d will be automatically triggered.
Oil ministers from Saudi Arabia and the U.A.E. have recently joined the group’s price hawks in calling for a large decrease in production at the upcoming meeting.
U.A.E. Oil Minister Obaid bin Saif al-Nasseri said on Janaury 3rd that: “The big slide in oil prices requires intervention by producers inside and outside OPEC to restore balance to the oil market.”
He added that: “The U.A.E. in its capacity as an OPEC member will work with other producers for price stability and to avoid sharp fluctuation in prices.”
When asked to give a figure for the possible production cut, al-Nasseri said that: “Specifying the volume of the cut will be done in light of statistics and studies that will be presented to the organization at its emergency meeting this month.”
A Saudi oil official was quoted on January 2nd as saying that the kingdom believed a cut of 1.5 million b/d would be necessary to restore market balance, following a statement released by the Gulf Cooperation Council (GCC) leaders on December 31st calling for oil ministers to reduce production to keep prices within the desired range of $22-$28 a barrel.
Kuwait, Iran, Libya, Venezuela, Algeria and Iraq have also voiced support in recent weeks for a large output cut.
© 2001 Mena Report (www.menareport.com)
